Quarterly Cross-Functional Survey Shows Three Point Improvement in
Executive Outlook Compared to Q1 2010
Executives' Outlook About Growth, Consumer Sentiment and Hiring
Improves While Concerns About Supply Cost and Availability Rise
ARLINGTON, Va., May 27, 2010 (BUSINESS WIRE) --The Corporate Executive Board (NASDAQ: EXBD) (CEB), a leading provider
of best practice research and analysis focusing on corporate strategy,
operations and management issues, announced today an improvement in its
quarterly Business Barometer survey measuring the economic assumptions
of nearly 400 senior executives. The Business Barometer provides a
unique measure of business sentiment by surveying executives within
functional roles across the entire corporate value chain on their
outlook for their organizations and a variety of economic factors that
can affect future business growth. Currently standing at a reading of
51, compared to 49 in Q1 2010 and 43 in Q4 2009, the Corporate Executive
Board Business Barometer shows that sentiment among senior executives
about economic outlook for the next 12 months crossed into positive
territory for the first time since the crisis.
Improved growth expectations contribute to the latest Business Barometer
reading: 70 percent of executives say they expect their companies'
revenues to increase, with most (54 percent) expecting growth in excess
of five percent over the next 12 months. While 64 percent of executives
anticipate greater cost pressures in the next 12 months, most (64
percent) expect just a one to four percent increase in costs overall.
Out of twelve economic indicators measured by the Business Barometer,
executives' assumptions about consumer confidence showed the greatest
sign of positive improvement, an indicator of rising consumer demand.
Sixty percent of senior executives say consumer confidence will improve,
with just seven percent saying it will go down, compared to 51 percent
and 14 percent respectively in Q1 2010.
Although executive confidence in customer demand has improved,
executives' concerns about supply-related risks increased substantially.
For example, 51 percent of operations management executives surveyed
expect higher supply chain disruption risk, compared to just 37 percent
in Q1 2010.
"While modest, the improvement in executive sentiment is a positive sign
that confidence in the recovery is growing as business fundamentals
continue to improve," said Oleg Polishchuk, senior director, The
Corporate Executive Board.
"With companies sitting on unprecedented levels of liquidity, we
anticipate a substantial uptick in business investment (as well as share
repurchase and dividend activity) across the next few quarters as
executives look to reallocate capital to higher yielding opportunities,"
said Michael Griffin, managing director, The Corporate Executive Board.
"Even though executives remain cautious, and increasingly concerned with
supply-related risks, we expect to see the tide of capital investment
begin to shift."
Indicators of Growth
Once again, The Corporate Executive Board Business Barometer showed
signs of future business growth through measured improvements in
executives' outlook on sales, competition, production and access to
While executives believe sales to existing customers will outpace
those to new customers, they are optimistic that both will rise in the
next 12 months. Sixty percent of sales executives surveyed believe
sales to new customers will increase and 70 percent believe sales to
existing customers will improve.
Fifty five percent of corporate finance executives surveyed expect
higher Capital Expenditures in the next 12 months (compared to 48
percent in Q1 2010), and 89 percent say their companies are protecting
or increasing R&D expenses (compared to 82 percent in Q1 2010).
The share of executives expecting higher competition slightly
increased to 52 percent, compared to 50 percent in Q1 2010.
In the next 12 months, 65 percent of operations management executives
surveyed expect to introduce a higher number of new products (compared
to just 58 percent in Q1 2010) and 67 percent expect to receive more
A majority of operations management executives surveyed (64 percent)
also expects expanded production levels in the next 12 months
(compared to 59 percent in Q1 2010), with only 14 percent indicating
they anticipate a decline.
Forty five percent of senior executives overall think access to credit
will improve over the next 12 months while 41 percent expect no change.
Hindering Growth: Signs of Increased Cost and Supply Chain Pressures
As was the case last quarter, executives continue to be concerned about
increases in cost and supply chain pressures.
Fifty seven percent of executives overall expect interest rates to
increase, compared to 53 percent in Q1 2009 and 44 percent in Q4 2009
who thought the cost of borrowing would rise.
Seventy three percent of HR executives surveyed expect average labor
costs in the next year to increase by one to four percent, with 52
percent expecting the cost of average health benefits to increase by
one to nine percent and 21 percent expecting more than a 10 percent
increase in such costs.
Fifty three percent of executives overall expect the price of energy
commodities to increase in the next 12 months, while 43 percent expect
the price of non-energy commodities to rise as well.
Moreover, 51 percent of operations management executives surveyed
expect higher supply chain disruption risk, compared to 37 percent in
The Corporate Executive Board Business Barometer is a forward-looking
diffusion index of expected business conditions, condensed from a survey
of more than 380 senior executives in North America and Europe across 33
industries. The Business Barometer provides a unique measure of business
sentiment among a representative sample of The Corporate Executive
Board's executive member network. The index measures the assumptions of
senior executives across six functional disciplines, including HR,
corporate finance, operations, sales and marketing, real estate and IT,
on the impact 12 key business and economic indicators will have on their
business in the year ahead.
For more information on The Corporate Executive Board Business
Barometer, visit http://cebviews.com/economic-outlook/.
About The Corporate Executive Board
The Corporate Executive Board Company drives faster, more effective
decision-making among the world's leading executives and business
professionals. As the premier, network-based knowledge resource, it
provides them with the authoritative and timely guidance needed to excel
in their roles, take decisive action and improve company performance.
Powered by a member network that spans over 50 countries and represents
more than 85% of Fortune 500, The Corporate Executive Board offers the
unique research insights along with an integrated suite of members-only
tools and resources that enable the world's most successful
organizations to deliver superior business outcomes. For more
information, visit www.exbd.com.
SOURCE: The Corporate Executive Board
Corporate Executive Board
Joni Renick, 571-303-4074